TOKYO, Dec 19 (Reuters) - Japan's Nikkei fell over 1 percent on Wednesday to its lowest level in nearly nine months amid caution ahead of the U.S. Federal Reserve's upcoming policy decision and a bearish debut for telecom giant SoftBank Group Corp's wireless unit following the country's largest IPO.

After swerving in and out of the red in a volatile session, the Nikkei share average was down 0.43 percent at 21,025.10 at the midday close after going as low as 20,880.73, its weakest since March 28.

"The market is caught between two opposing forces due to varying expectations towards the FOMC (Federal Open Market Committee) meeting," said Yutaka Miura, a senior technical analyst with Mizuho Securities.

"Those who expect the yen to strengthen after the FOMC are trimming their long positions, while those who see U.S. shares rising after the meeting are covering shorts."

The Fed is widely expected to raise interest rates for the fourth time this year after its two-day meeting that is due to end later in the day.

Focus is on the central bank's stance towards hiking rates in 2019. Many economists see the Fed continuing to tighten its monetary policy next year, although at a slower pace in the face of a possible economic slowdown.

SoftBank Corp, the wireless unit of SoftBank Group , which had made a $23.5 billion initial public offering, saw its shares slump as much as 10.4 percent in their debut on Wednesday.

During the IPO period, SoftBank Group suffered a rare nationwide mobile phone service outage. SoftBank Corp's relationship with Huawei Technologies Co Ltd also came under scrutiny.

SoftBank Corp's shares were at 1,360 yen at the midday break compared to the IPO price of 1,500 yen. SoftBank Group was down 0.48 percent.

"SoftBank Corp did not debut at a great time, with the broader market in a downturn. The lower debut is playing a role in dampening market sentiment," said an equity strategist with a domestic securities house.

"That said, key players - such as hedge funds and institutional investors - are more focused on the Fed meeting and the weak SoftBank Corp debut does not seem to be affecting their positions."

Mercari Inc shed 4.5 percent after the Nikkei business daily reported that the company will no longer offer its flea market app in Europe.

The broader Topix was down 0.35 percent at 1,557.01 after brushing 1,546.99, its lowest since May 2017.

Of the Tokyo Stock Exchange's 33 sub-sectors, 22 were in negative territory. (Editing by Subhranshu Sahu)